House passes school shift payback bill

By T.W. Budig, ECM Capitol Reporter

The Republican House passed House Education Finance Committee Chairman Pat Garofalo’s school-shift payback bill Thursday, March 15, legislation that would tap into the newly revitalized state budget reserves in order to more speedily payback K-12 funding shifts.

Lawmakers have borrowed more than $2 billion in school funding in recent times in crafting state budget solutions. By law, $318 million in recent budget surplus dollars went automatically to pay back shifts.

Garofalo, in his bill, commits an additional $430 million. But by tapping into the budget reserves for the money, lowers the reserves to about $570 million.

“Today is a day to give thanks,” said Garofalo, R-Farmington.

“When you have cash on hand, you pay off your debt,” he said.

Democrats criticized the legislation as insufficient and reckless.

Rep. Joe Atkins, DFL-Inver Grove Heights, expressed alarm over tapping the budget reserves.

That would leave the state with only about 11 days worth of money in an emergency, he said.

Atkins referred to a fellow lawmaker’s depiction of bad legislation as putting earnings on a pig.

“These ain’t even nice earnings,” Atkins quipped of Garofalo’s bill.

Democrats attempted to amend the legislation by attaching a tax provision closing perceived loopholes in tax code pertaining to foreign operating corporations (FOC) — they argue corporations unfairly use offshore “tax havens” to escape paying taxes.

Rep. Lyndon Carlson, DFL-Crystal, said his FOC amendment would entirely pay back the more than $2 billion in school payment shifts.

This touched off a tax debate.

Rep. Keith Downey, R-Edina, argued that even with Garofalo’s tapping of the reserves, the remaining amount, the $577 million, would still be much larger than the reserves of short months ago.

Democrats can “demonize” business all they want, argued Downey, but the FOC provision would kill job creation.

Rep. Sarah Anderson, R-Plymouth, argued Democrats were sending business a message in their FOC amendment.

“‘Go away,’” said Anderson.

House Tax Committee Chairman Greg Davids, R-Preston, styled the proposed FOC provision as a “champion amendment” for the frequency it appeared.

But Rep. Ryan Winkler, DFL-Golden Valley, argued big business didn’t need a tax subsidy from the state of Minnesota.

“You don’t have a plan to pay that back,” said Winkler of Republicans and paying back the shifts.

Rep. John Benson, DFL-Minnetonka, blamed the influence of Washington lobbyists for the “monstrosity” of federal tax law creating the perceived offshore tax havens.

Rep. Ann Lenczewski, DFL-Bloomington, said the Republican House tax bill itself contains provisions pertaining to FOCs.

House Majority Leader Matt Dean, R-Dellwood, successfully motioned to have Democratic FOC provisions ruled non germane — outside of the scope of Garofalo’s bill.

“Representative Dean, please think about this one,” warned Atkins, arguing the Dean’s actions went against House custom and usage.

But two Democratic FOC provisions fell.

One provision in Garofalo’s bill placing teacher effectiveness ahead of seniority in determining teacher layoffs had Rep. Pam Myhra, R-Burnsville, speaking emotionally on the House floor.


Myhra related how she struggled to learn to read as a child and how an excellent fifth-grade teacher — “the teacher who saved my life, who gave me a future,” she explained — was laid off ahead of less a qualified but more senior teacher.

That was just wrong, Myhra said.

Garofalo’s bill passed the House on a 74 to 59 vote.

The Senate has yet to act on a similar bill.

Garofalo thanked House Republican freshmen for their willingness to support the legislation — he expressed thanks that Myhra and other freshmen had defeated Democratic rivals last election.

“They (defeated suburban Democrats) followed their urban leadership off the cliff,” he said.